Business models can be divided into Six ways
Everything it takes to make something:
- Design,
- Raw materials manufacturing and labor.
Everything it takes to sell that thing:
- Marketing,
- Distribution& delivering a product and processing the sale.
How and what the customer pays:
- Pricing strategy
- Payment methods
- Payment timing and so on.
What innovation and value addition provided:
- Cost reduction
- Convenience
- Value proposition.
What type of business to be adopted
A business type can be defined in terms of value which customers are going to get as what the business gets out of it is the profit. Under mentioned types of business model that any for-profit business will fall into:
- MANUFACTURER
- SOCIAL ENTERPRISE
- TRADING
- E Commerce
- SERVICES
Manufactures
A manufacturer takes raw materials and creates a product, or assembles pre-made components into a
product (E.g. car manufacturers). A manufacturer may sell its products directly to its customers, or it can
outsource sales to another company.
PRODUCTION: The processes and methods used to transform tangible inputs (raw materials etc.) and
intangible inputs (ideas, information, etc.) into goods or services.
JOB WORK: Job work is the processing or working on goods supplied by another person/entity to
complete a part or whole of the process.
ANCILLARIES: Ancillary industries are those which manufacture parts and components to be used by
larger industries.
TRADING
The act or process of buying, selling, or exchanging commodities, at either wholesale or retail, within a
country or between countries.
- Distributors
- Retailers
- Franchise
SERVICES
- Services like health, education, hospitality etc.
- Professionals
- Self employed
- Service Providers for Companies
SOCIAL ENTERPRISE
- Societies
- Cooperatives
- Trust
- Company under Chapter 8 of Company Act
- Farmers Producer Organization
- Self Help Groups
E Commerce
- Business to Business
- Business to Customer
- Customer to Customer
Different Types of Business Models
1. Advertising
Advertising model has been existing from long its only that with the value additions in the business
with the new technologies emerging Tit has become easier and sophisticated , therefore from print
to online.
Examples: CBS, The New York Times, YouTube
2. Affiliate
The affiliate business model is related to the advertising business model but have some specific
differences.
Examples: TheWireCutter.com, TopTenReviews.com
3. Brokerage
Brokerage businesses connect buyers and sellers assists facilitate a transaction. They charge a fee
for each transaction to either the buyer or the seller and sometimes both.
4. Concierge/customization
Some businesses collect existing products or services and bring a custom element to the
transaction that makes every sale unique for the customer who grabs on to it.
For Example: think of custom travel agents who book trips and experiences for wealthy clients. You
can also find customization happening at a larger scale with products like Nike’s custom sneakers.
5. Crowdsourcing
In the current system crowdsourcing has become popular . These models are most frequently
paired with advertising models to generate revenue, Companies that are trying to solve difficult
problems often publish their problems openly for anyone to try and solve.
6. Disintermediation
Disintermediation is when you sidestep everyone in the supply chain and sell directly to consumers,
allowing you to potentially lower costs to your customers and have a direct relationship them as
well.
Examples: Dell
7. Fractionalization
Instead of selling an entire product, you can sell just part of that product with a fractionalization
business model.
Examples: Disney Vacation Club, Net Jets
8. Franchise
Franchising is common in the restaurant industry. In a franchise business model, you are selling the
recipe for starting and running a successful business to someone else..
Examples: CCD , McDonald’s.
9. Freemium
This business model , gives away part of your product or service for free and charges for premium features or
services.
Example- LinkedIn
10. Leasing
Leasing is most commonly used for high-priced products where customers may not be able to afford a full
purchase but could instead afford to rent the product for a while.
Examples: Cars, Direct Capital
11. Low-touch
With a low-touch business model, companies lower their prices by providing fewer services. Some of the best
examples of this type of business model are budget airlines and furniture sellers like IKEA.
Examples: IKEA, Ryan Air
12. Marketplace
Marketplaces allow sellers to list items for sale and provide customers with easy tools for connecting to sellers.
Examples: eBay, Airbnb
13. Razor blade
The razor blade business model is named after the product that essentially invented the model: sell a durable
product below cost to increase volume sales of a high-margin, disposable component of that product.
Examples: Gillette, Inkjet printers, Xbox, Amazon’s Kindle
14. Subscription
Subscription business models are becoming more and more common in today’s scenario. In this business model,
consumers get charged a subscription fee to get access to a service.
Examples: Netflix, Salesforce, Comcast
15. Reverse razor blade
Flipping the razor blade model around, you can offer a high-margin product and promote sales of a low-margin
companion product.
Examples: Apple’s iPod & iTunes, and now Mac Books & Pages, Numbers, and Keynote
16. Reverse auction
A reverse auction business model turns auctions upside down and has sellers present their lowest prices to
buyers. Buyers then have the option to choose the lowest price presented to them.
Examples: Priceline.com, LendingTree.
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